Big Tech’s 2025 is off to a rough start. Amazon (AMZN), Google (GOOG, GOOGL), and Microsoft (MSFT) missed Wall Street’s expectations on cloud revenue in their latest quarters; Apple (AAPL) fell short on iPhone sales; and Tesla (TSLA) disappointed on the top and bottom lines.
And that's weighing on the companies’ stock prices. Google and Microsoft are down 2.7% and 2.9% year to date, respectively, while Tesla is off 17%. Apple's stock has declined over 5%. Amazon is up 4.3% during the same period, but, as of Wednesday, is off 1.4% since it reported its earnings on Feb. 7.
But one company is thriving: Meta (META).
The social media giant’s stock is up 24% since the start of the year and, as of Wednesday, is riding a 17-session winning streak on Wall Street. Why is Meta performing so well when other hyperscalers are falling?
It’s certainly not because its rivals are plowing money into AI investments. Sure, Amazon said it plans on capital expenditures north of $100 billion in 2025, and Google and Microsoft will shell out $75 billion and $80 billion, respectively. But Meta also plans to splash huge sums on the technology, saying it’ll pour between $60 billion and $65 billion into capital expenditures this year.
It's simpler than that. While its Big Tech rivals are spending to draw outside customers, Meta's spending will power its own growth.
“I think Meta may actually be the most consequential company of our time right now, and I think it's because they are the ultimate customer zero,” Futurum Group CEO Daniel Newman explained. “Nothing they are doing as a hyperscaler is merely for the sake of reselling to others.”
Meta’s investments are powering growth now
Part of the reason Meta’s AI investments are paying off on Wall Street is because the spending directly benefits the company’s ad sales and the time users spend on its platforms.
“They've used [their AI investments] largely to drive their business where … other companies have been trying to be a little bit more all things to all people,” explained Zeus Kerravala, founder and principal analyst at ZK Research.
The benefit to Meta’s approach is clear in its early results. According to CEO Mark Zuckerberg, artificial intelligence is impacting virtually all of the company’s work.
“Improvements to our AI-driven feed and video recommendations have led to an 8% increase in time spent on Facebook and a 6% increase on Instagram this year alone,” Zuckerberg explained during the company’s Q3 earnings call in October.
And during Meta’s Q4 call, CFO Susan Li said 4 million advertisers are using the company’s generative AI tools to create ads, up from 1 million six months ago. All of that makes AI an easier sell for investors.
“Meta is just so much more straightforward,” explained Patrick Moorhead, CEO and chief analyst at Moor Insights & Strategy.
That’s not to say that Amazon, Google, and Microsoft aren’t seeing positive traction thanks to their AI investments. But rather, the path from laying out the capital to build data centers to customers signing up for their AI platforms isn’t as clear-cut as Meta’s.
“[Hyperscalers have] all talked about services leveraging AI that they're offering on their own,” TECHnalysis Research founder and chief analyst Bob O’Donnell explained. “I just think that Meta doesn't have the distraction of selling their … [computing] services.”
Meta’s open-source approach could be a win in the long run
The possibilities of Meta’s open-source Llama AI models are also attracting Wall Street as the company seeks to build out a global AI standard. While Meta currently offers the software for free, there are a handful of limitations on how users can take advantage of it, including a limit of 700 million monthly users accessing a service using Llama.
“You could definitely see how all these companies that are going to use Llama as a base model that could, through licensing, become a really big revenue stream in the future,” Newman said.
And Zuckerberg is keen on ensuring Llama 4, the company’s next-generation open-source model, leads the industry.
“Llama 4 will be natively multimodal — it's an omni-model — and it will have agentic capabilities, so it's going to be novel and it’s going to unlock a lot of new use cases,” he said during the company’s Q4 earnings call. “I'm looking forward to sharing more of our plan for the year on that over the next couple of months.”
How Meta ends up successfully monetizing Llama is still up in the air. And it’s still incredibly early in the AI race to declare any winners just yet. But for now, investors are clearly impressed with what Zuckerberg and his company have put together so far.
source: finance.yahoo.com
